Reversing privatisation would save households £250 a year

Polls also show the majority of the public would support bringing services under public ownership.

Polls also show the majority of the public would support bringing services under public ownership

Households would save around £250 a year if energy, water and rail were in public ownership.

New research by Corporate Watch and We Own It suggests that savings would be made both from shareholder profits not being paid as well as from the fact that the government could borrow more cheaply than private companies to raise the money needed to invest in services.

In 2013, private energy, water and rail companies paid out £12.7 billion to investors. If these services went public, there would be a total saving of £6.5 billion; £4.2 billion from energy, £2 billion from water and £352 million from rail services.

This would filter down to household savings of £160 on electricity and gas, £75 on water and £13 on railways.

This week is important in assessing the impact of privatisation. Monday marked the 28-year anniversary of gas privatisation while Thursday will mark 24 years since electricity privatisation. Friday is the 25th anniversary of water privatisation.

The research also comes just after the government’s decision to reprivatise the East Coast railway.

Prices of these services have been have been outstripping inflation for years. Between 2007 and 2013, household gas and electricity bills rose in real terms by around 41 per cent and 20 per cent respectively.

In real terms, water bills have increased by 50 per cent since privatisation, while rail fares are 23 per cent higher than they were in 1995. These companies are owned by some of the richest people in the world, including banks, investors and foreign governments.

Cat Hobbs, director of We Own It, said:

“Households are getting squeezed by ever rising train ticket prices, energy bills and water bills, while incomes can’t keep pace. Politicians talk about the cost of living, but it’s time to look at the cost of privatised living.

Privatisation is a failed experiment while public ownership could be a much more efficient alternative. We could run these services ourselves and save money, either for households or for government.”

According to polls, 66 per cent of the public want railways to be in public ownership, 68 per cent want energy to be in public ownership and 71 per cent want water to be in public ownership.

The authors of the research add that the actual savings of making these services public would probably be even higher than estimates, as the costs involved in regulating and outsourcing private services would be eliminated.

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26 Responses to “Reversing privatisation would save households £250 a year”

  1. itdoesntaddup

    Fantasy economics. I assume you think that the assets of these operations can be financed at no cost? Or that “nationalisation” won’t in practice lead to a raft of expensive, badly negotiated PFI deals in a bid to try to keep the finances off the publicly acknowledged debt figures – as in the NHS?

    The reasons our utilities bills have soared relate to political interference and regulation. Pricing and investment is controlled by regulators and politicians and Whitehall, who decide that we must invest in egregiously expensive energy sources and fixes the prices they get for their output to guarantee profits, and disinvest in cheap ones; that we must observe the EU Water Directive that is designed to cope with Spanish drought problems, not the UK’s wetter climate. These industries are in effect already nationalised, with only a rump of competition based on trying to cut the cost of billing services to save a few pennies in headline prices at the expense of customer service.

    The Miliband price freeze idea has landed us with just that – locked in high prices – just when they should be falling in sympathy with international oil and gas prices, because his threat effectively forced the companies to lock in their prices forward.

    If you really want to lower prices to consumers, get rid of the stupid energy policy and excessive regulation and allow some proper competition back into supply: ditto for water. It worked before. It can work again.

    That leaves rail: a nineteenth century form of transport that simply can’t compete on a level playing field against road and air transport. It absorbed £6.8bn in subsidies in 2013: those won’t go away if the train operators are nationalised.

    All of this will require substantial sums to be paid in compensation for contract terminations, adding yet more to the national debt – plus of course the cost of the underlying assets.

    Got a few hundred billion pounds lying under the table to fund it all?

  2. swat

    It would, but Labour simply haven’t the b***ls to do it. Re-Nationaliastion would prevent wastage and duplication and inefficiencies in most Public Services. It would also meet the needs of most citizens too, and provide pride in a British owned Industry.

  3. madasafish

    So assets can be repurchased at nil cost?


    I use the word advisedly because it is. And before anyone suggests compulsory nationalisation without compensation, the HRA will prevent it: apart of course from the Governments of the companies which own the assets.

    Really this is written for children and those who are unable to comprehend the world in which they live.

  4. Selohesra

    Polls also show the majority of public would support restoration of capital punishment for certain crimes – that does make it right though

  5. blarg1987

    Costs would be greatly reduced as government costs to borrow are lower then private (most private companies are actually borrowing of the money markets or themselves to finance existing services).

    We can reduce costs by waiting for rail franchises to expire and not re tender (free).

    We can also tell the energy companies we will no longer subsidise them and if they want government subsidies it is exchanged for a stake in their companies. If they really throw their toys out the pram we can say we want our money back.

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